Stocks have been rising throughout Wednesday morning. Shortly after the open reports surfaced that Slovakian politicians have reached an accord to approve the EFSFexpansion by Friday. All 17 euro zone countries will then have ratified the expansion.
At the same time, European Commission President Jose Manuel Barroso has presented elements for a bank recapitalization plan in Europe.
Barroso appears to be endorsing the German position: banks should raise capital first, go to national governments second, and rely on the newly expanded EFSF last.
Barroso also wants:
1) extra powers for the European Commission to intervene in national budgets and monitor their execution.
2) to bring forward the European Stability Mechanism (ESM), the successor to the EFSF, to mid-2012 from mid-2013
3) more rigorous capital standards for banks.
Bottom line: Europe is starting to get its politicians in line, marching toward a much tighter euro-integration. There will certainly be voices in opposition, but the consensus seems to be that Europe is going all-in on tighter fiscal integration.
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